Airlines

About Those Millions of Jobs Saved by the Auto Bailout…

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One big reason that the Obama administration pumped nearly $100 billion to bailout the Puny Two—Government Motors and Chrysler—was that letting the two companies go through a regular bankruptcy would cause massive job losses at a time when the unemployment rate was already unacceptably high. But Hoover Institute's Paul Roderick Gregory offers evidence suggesting that this claim might be hooey.

Comparing the employment record of the airline industry that went through a wave of bankruptcies post 9-11 with the auto industry, he finds:

The four airlines [US Air and United in 2002; Northwest and Delta] had 204,000 employees on the dates they filed bankruptcy. They had 164,000 on the dates they emerged from bankruptcy. By this measure, bankruptcy cost airline employees some 20% of their jobs. The costs of bankruptcy were borne by employees, creditors and other stakeholders. It did not cost taxpayers.

On the date GM filed its taxpayer-funded bankruptcy, it had 92,000 employees. After bankruptcy it shrunk to 77,000, for a 16% loss of jobs. The GM job loss was only four percentage points lower than the airlines, which were in much worse shape. My guess is that a regular bankruptcy would have yielded about the same number of continuing jobs at GM as the taxpayer-funded bankruptcy.

The White House estimates an eventual $14 billion price tag for the GM and Chrysler bailouts. What has the $14 billion bought us? It certainly hasn't saved millions of jobs–more like 4,000, and probably fewer.

But the $14 billion price tag is much too charitable becasue, as I'd noted previously, it ignored the cost of the tax breaks received by GM. Once those were factored in, the loss would be closer to $28 billion.  Even this might be too rosy because the loss on the principal then was based on the government selling its remaining shares in GM at $42.85 per share. But at closing yesterday, GM stock was trading at around $23 a share, about $10 below its December IPO price.

Bonus Material: Ford's latest ad takes off the gloves and slams GM for rattling its tin cup before Uncle Sam. It features a Ford pick-up—not hybrid, mind you—buyer named Chris saying:

I wasn't going to buy any another car that was bailed out by our government. I was going to buy from a manufacturer that's standing on their own, win, lose, or draw. That's what America's about is taking the chance to succeed and understanding when you fail that you gotta pick yourself up and go back to work. Ford is that company for me.

Ouch!

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  1. It features a Ford pick-up?not hybrid, mind you?buyer named Chris saying:

    I wasn’t going to buy any another car that was bailed out by our government. I was going to buy from a manufacturer that’s standing on their own, win, lose, or draw. …Ford is that company for me.

    Ford Motor Company, get out of my head!

    1. I got a tingly feeling in my leg when I watched that. Like when I climb the rope in gym class. What is that anyway?

      1. Neuropathy.

    2. Not to put too fine a pickup-drivin’ hillbilly point on it, but FUCKIN’ A BUBBA!

    3. That’s why the car I just bought was a Ford.

      1. Likewise.

        Lifelong GM driver, but my next vehicle will be a Ford.

  2. About Those Millions of [Union] Jobs Saved by the Auto Bailout…

    That is the only thing that mattered to King Obama’s (The Hansome) reign… uh, presidency.

    1. [UNIONZ]!

      1. “SCREECH” *flings poo*

  3. Even this might be too rosy because the loss on the principal then was based on the government selling its remaining shares in GM at $42.85 per share. But at closing yesterday, GM stock was trading at around $23 a share, about $10 below its December IPO price.

    Who cares about money when it doesn’t belong to you? The sky’s the limit!

    1. Their hero Warren Buffett can pick up the tab.

  4. The White House estimates an eventual $14 billion price tag for the GM and Chrysler bailouts. What has the $14 billion bought us? It certainly hasn’t saved millions of jobs–more like 4,000, and probably fewer.

    That’s about $3.5M USD per job. That’s some expensive job – few CEOs in Fortune 500 make that kind of figure. But that’s government for you: $10,000.00 for a new toilet, $3.5M to “save” some Union job.

  5. I’ve got a man crush on Allan Mulally. The guy has balls the size of grapefruit to restructure by mortgaging everything and the tact/patience he has exhibited not rubbing the bailout in the face of the other two until his market share slipped some was impressive.

  6. Nissan is that company for me (once the used car market swings back in favor of buyers, that is).

  7. We buy only from companies that don’t use UAW workers now. Helpfully, the UAW posts a list of all the manufacturers that do.

    1. AFAIK, It’s the Big 3 and Mitsubishi. Everything else is non-union.

      1. It’s much bigger than that. I’d post the list but the UAW site seems to be down at the moment. There are some Toyota and other “Japanese” cars that use UAW labor.

        1. Toyota had a plant that they partnered with GM on, but I think it’s now defunct. If there are others, I’d love to see the list.

          I know this: The Japanese and Korean manufacturers are building here, and the Big 3 continue to push production to Mexico. I wonder why?

  8. How about the MILLIONS of jobs and tax dollars being held up by not going forward with Blue Ridge and Keystone Pipelines?
    USFWS Impedes America Economy While Supporting OPEC
    On December 6, 2010 Obama nominated Daniel M. Ashe to head and direct the US Fish and Wildlife Service (USFWS). What is the USFWS and who is Ashe? I feel that both questions are fairly simple to answer.
    The USFWS has impeded job growth, slowed the economy, restricted freedoms, restricted access to American lands by American people, is being used as a proxy arm of the government to black mail and beat into submission organizations like Gibson that are not supporters of the regime, and is being used, in a manner of speaking, to promote American reliance on a terrorist supporter for oil.

    http://msmignoresit.blogspot.c…..while.html

  9. What has the $14 billion bought us?

    I don’t know what it bought the rest of us, but it bought Obama about 380,000 votes.

  10. uh, not quite accurate.
    Even FORD which now tries to make all tough about itself supported the bailout because the failures of Chrysler and GM would have wiped out many of their suppliers (and more jobs)-the airline comparison is a fake. http://factcheck.org/2011/09/f…..-bailouts/

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